Swiss pharmaceutical firm
Novartis
will complete the spinoff of its generics and biosimilars business on Wednesday, when the division begins trading separately as Sandoz.
The move, representing yet another corporate spin-off this year, is meant to help Switzerland-based Novartis concentrate on its core drug research and development business.
Novartis (ticker: NVS) CEO Vas Narasimhan told CNBC that the company has accelerated efforts over the past six years—including more than $100 billion in transactions to exit other businesses—to concentrate Novartis as a “pure-play innovative medicines company focused on bringing our R&D efforts and the new medicines we create to markets around the world.”
Sandoz Group AG shares will be listed and traded on the SIX Swiss Exchange under the symbol “SDZ,” while its American depositary receipts will be traded on OTCQX. Sandoz will also be included in the Swiss Performance Index (SPI), Swiss Leader Index (SLI), and other Swiss indexes after the spinoff.
Narasimhan has slimmed down Novartis’ operations since arriving at the company in 2018, as part of a pure-play strategy several major pharmaceutical companies are pursuing, Barron’s previously reported. He sold Novartis’ share in a consumer-health joint venture to GSK (
GSK
) for $13 billion, and spun off its eye-care business as Alcon (ALC). Novartis had previously sold its animal health business in 2014 to Eli Lilly (LLY).
Novartis said shareholders approved the spinoff on Sept. 15. Novartis’ shares are up 9.7% so far this year, and up 27% over the past 12 months.
It has been a busy year for corporate spin-off activity. Johnson & Johnson (JNJ) separated its Kenvue (KVUE) consumer health division in August, and cereal and breakfast food maker WK Kellogg (KLG) separated from the former Kellogg on Monday. The snack business, including brands such as Cheez-Its and Pringles, renamed itself Kellanova and kept the “K” ticker symbol.
The Sandoz spinoff will be completed through a dividend-in-kind, whereby each Novartis shareholder will receive one Sandoz share for every five Novartis shares, and each Novartis ADR holder will receive one Sandoz ADR for every five Novartis ADRs.
Novartis shareholders and ADR holders will receive cash for every fractional interest. The spinoff is expected to be tax-neutral for Swiss tax and U.S. federal income tax purposes.
Write to Janet H. Cho at [email protected]
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